Beyond the Theory of Constraints: The Key Issue

            I previously wrote about the new book Beyond the Theory of Constraints: How to Eliminate Variation & Maximize Capacity and how its author, William Levinson, challenges traditional thinking about the theory of constraints. He argues that it is possible to eliminate variation and operate a balanced factory at 100 percent capacity. Eli Goldratt and Jeff Cox, when they first presented the theory of constraints in their book, The Goal, claimed this could not be done.

            Now that the new book is available, I invited Bill Levinson to describe in his own words the key theme of the book. Here are his comments:

 

            When manufacturing professionals think of variation, product characteristics are the first issue that comes to mind. Beyond the Theory of Constraints argues, however, that variation in processing and material transfer times must be taken as seriously as variation in product characteristics.

 

            Variation in product characteristics is a major obstacle to 100 percent quality, and variation in processing and material transfer times prevents achievement of 100 percent throughput. This is not to say that 100 percent equipment utilization, which is often a dysfunctional performance goal, should be the ultimate objective. On the other hand, Henry Ford showed that this utilization is approachable if the variation can be suppressed, and the book covers the methods he used to do this.

 

            Even if the factory does not need to increase its capacity utilization, variation also increases cycle time. On-time delivery is a major competitive advantage, and the ability to make to order instead of to forecast can provide an overwhelming advantage. Its achievement, however, requires sufficiently short lead times between order placement and order fulfillment. Long cycle times work against this consideration while increasing inventory in the bargain.

 

            All variation comes from two sources: assignable or special causes, and random or common causes. Beyond the Theory of Constraints shows that a substantial portion of the variation is not random, and that factories and service organizations can often remove it. The chief obstacle to its removal is often failure to recognize it, because people become used to living with it or working around it. This is one of the book's central themes, and lean manufacturing experts like Henry Ford, Shigeo Shingo, and Taiichi Ohno point out that it applies to all forms of waste. Plant personnel, including frontline workers, can be trained and empowered to recognize the variation, and there are analytical techniques that can force it to become visible.

           

The major factor that prompted me to write the book was the obvious discontinuity between the statement in The Goal – “Why do you think it is that nobody after all this time and effort has ever succeeded in running a balanced plant?” – and Henry Ford's statement, “The idea is that a man must not be hurried in his work—he must have every second necessary but not a single unnecessary second.”

 

Ford succeeded in doing what The Goal says is impossible, and this led me to investigate how he did it: namely, by treating variation in processing and material transfer times as seriously as modern quality practitioners treat variation in product characteristics.